Consumer Spending- Is It Actually on the Rise?

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There are plenty of ways to determine whether an economy is on the upswing or not, and one of the most popular to identify and discuss is consumer spending.  Most experts believe consumer spending and the general health of the economy directly correlate - that increased consumer spending indicates a growing healthy economy, and that decreased consumer spending is a sign of a poor economy. For this reason, analysts have been watching consumer spending like a hawk to determine when exactly we’ll transcend our current economic state.

Looking over these expert’s findings, we have some good news and some bad news. On one hand, consumer spending is on the rise. On the other hand, it isn’t rising as quickly as some experts feels it should be.

After years of savings and paying down debt, consumers are spending more on relatively non-essential items such as restaurant meals and new cloths than they have in years. Consumers aren’t, however, spending lavishly or purchasing too many big-ticket items, like new cars. The sort of consumer spending we’re seeing is promising, but it doesn’t indicate we’re out of the hole just yet.

Some analysts even worry that consumer spending should be much higher than it is right now according to other economic indicators. For example, at the end of 2011 U.S. salaries increased for the first time in 9 months, which some analysts feel should have resulted in a massive surge of consumer spending, yet didn’t.

Consumer spending, like so much of economics, is as much about psychology as economics. We’re unlikely to see a huge jump in discretionary spending until consumers not only have the means to buy lavishly, but until they feel ready to buy big ticket items again.